MANILA MINING CORPORATION, PETITIONER, VS. MIGUEL TAN, DOING BUSINESS UNDER THE NAME AND STYLE OF MANILA MANDARIN MARKETING, RESPONDENT.

Manila Mining versus Tan

The Case

This is a petition for review on certiorari brought by Manila Mining Corporation against Miguel Tan, who does business under the name and style of Manila Mandarin Marketing. Tan sued Manila Mining to collect the unpaid price of electrical materials he had delivered, and Manila Mining resisted on the theory that its obligation to pay had never accrued because Tan supposedly failed to comply with the requisites for payment written into its purchase orders. The case matters because it gathers in one place the rules a bar candidate must command on the perfection of a contract of sale, on when the best evidence rule actually bites, and on the deference the Supreme Court gives to the factual findings of the trial court and the Court of Appeals.

Procedural History

Tan filed a complaint for collection of a sum of money before the Regional Trial Court of Manila, Branch 55. After Tan rested his case, Manila Mining filed a demurrer to evidence. The trial court denied the demurrer and directed Manila Mining to present its evidence. The trial court then rendered judgment in favor of Tan, ordering payment of the principal balance with interest and liquidated damages. Manila Mining moved for reconsideration, and the trial court denied the motion.

Manila Mining appealed to the Court of Appeals, which denied the appeal and affirmed the trial court's decision in full. Manila Mining then came to the Supreme Court by petition for review on certiorari, raising a single issue: whether its obligation to pay had already legally accrued given that Tan had not, in its submission, complied with all the prerequisites for payment imposed under its purchase orders.

Facts

Miguel Tan, trading as Manila Mandarin Marketing, was in the business of selling electrical materials. From the nineteenth of August to the twenty-sixth of November, nineteen hundred ninety-seven, Manila Mining ordered and received various electrical materials from Tan valued at two million three hundred forty-seven thousand eight hundred eighty pesos. The parties agreed that the purchase price would be paid within thirty days from delivery, with interest at eighteen percent per annum in case of default, and attorney's fees equal to twenty-five percent of the claim in case suit became necessary.

Manila Mining made partial payments amounting to four hundred sixty-four thousand six hundred thirty-six pesos. Despite repeated demands, it failed to pay the remaining balance of one million eight hundred eighty-three thousand two hundred forty-four pesos, which was covered by nine invoices. Tan therefore filed a collection suit in September 2001.

At trial, Manila Mining's sole witness was its accountant, who testified that standard office procedure required a supplier to present the original sales invoice and purchase order when claiming payment, and that the absence of stamp marks on the documents meant they had never been received by Manila Mining's representatives. On rebuttal, Tan presented his sales representative, who testified that he had delivered the originals of the invoices and purchase orders to Manila Mining's accounting department, and who showed three customer's acknowledgment receipts bearing the notation that the signer acknowledged receipt of the statement of account together with the corresponding original copies of the invoices, purchase order and requisition slip, bearing acknowledgment of receipt of goods.

Issues

• Whether or not Manila Mining's obligation to pay had already legally accrued despite its claim that Tan had not complied with all the prerequisites for payment imposed under its purchase orders.
• Whether or not the photocopies of the invoices and purchase orders were admissible in evidence despite Manila Mining's invocation of the best evidence rule.
• Whether or not Tan was guilty of laches for filing the collection suit nearly four years after the transaction.

Applicable Provisions

Article 1475 of the Civil Code, which the Court quotes to fix the moment of perfection of the sale, provides:

Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

This provision is the pivot of the case: it tells us that once the purchase orders were accepted and the goods supplied, the reciprocal right to demand performance arose at once.

Article 1545 of the Civil Code, which Manila Mining invoked to justify its refusal to pay, provides:

Article 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition.

The Court rejects its application here because the sale had already been perfected and performed by delivery, so there was no unperformed condition left to excuse payment.

Section 3 of Rule 130 of the Rules of Court, the best evidence rule, provides:

Section 3. Original document must be produced; exceptions. When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself.

The Court holds this rule inapplicable because the contents of the writings were never directly in issue; only their existence and general purport were.

Ruling

On the first issue, the Court holds that the petition raises a question of fact, which is beyond its power to review. Findings of fact of the Court of Appeals, especially when in agreement with those of the trial court, are accorded not only respect but even finality and are binding on the Supreme Court, absent a showing that they are devoid of support. On the merits, the Court holds that the purchase orders constituted accepted offers when Tan supplied the electrical materials, so Manila Mining cannot evade its obligation to pay by claiming lack of consent to perfected contracts of sale. The invoices furnished the details of the transactions.

On the second issue, the Court holds that the best evidence rule applies only if the contents of the writing are directly in issue. Where the existence of the writing or its general purport is all that is in issue, secondary evidence may be introduced in proof. Manila Mining did not deny the contents of the invoices and purchase orders; its lone contention was that Tan did not submit the original copies to facilitate payment. The photocopies were therefore admissible to prove the contract of sale.

On the third issue, the Court holds that Tan was not guilty of laches. The records show he brought suit less than a year after Manila Mining stopped making partial payments, and he had no reason to go to court while Manila Mining was paying its obligation, even if only partially, under the contracts of sale.

Doctrine

A contract of sale is perfected at the moment there is a meeting of minds upon the thing and upon the price, and from that moment the parties may reciprocally demand performance. Purchase orders accepted by the supplier's delivery of the goods give rise to a perfected sale, and the buyer cannot escape payment by invoking Article 1545 on unperformed conditions.

The best evidence rule applies only when the contents of a document are directly in issue; where only the existence or general purport of the writing is in question, secondary evidence is admissible. Finally, findings of fact of the Court of Appeals that agree with those of the trial court are binding on the Supreme Court, and laches does not run against a creditor while the debtor is still paying, even partially.

Disposition

The petition was denied for lack of merit, and the decision and resolution of the Court of Appeals were affirmed; Tan won and Manila Mining was ordered to pay the principal balance with interest and liquidated damages.

Remember This

Memorize this line: a contract of sale is perfected by mere meeting of the minds on the thing and the price, and from that moment the parties may reciprocally demand performance. Examiners use this case to test the best evidence rule's requirement that contents be directly in issue, and the finality accorded to factual findings of the lower courts.